US seizes website alleged to be $1 billion illicit drug marketplace

US authorities say they seized bitcoins worth about $US3.6 million, which they claimed is the largest seizure ever of the virtual currency, as the FBI also seized alleged online drug and gun marketplace Silk Road.
Photo: AFP

The US Justice Department has arrested the mystery man who ran a hidden website called Silk Road that served as an Amazon.com-like marketplace for illegal drugs and guns, which were purchased with Bitcoin virtual currency.

Authorities said the website had been used by "several thousand drug dealers" since January 2011 to distribute hundreds of kilograms of narcotics with sales exceeding $US1 billion.

Federal authorities said they had seized bitcoins worth about $US3.6 million, which they said is the largest seizure ever of the virtual currency.

The FBI also seized the Silk Road website, which customers could access only after running the anonymity software Tor, which encrypts web traffic and makes it difficult to determine who's running the site or visiting it.

Federal prosecutors said the website was operated by a man who called himself "Dread Pirate Roberts," who was actually 29-year-old Ross William Ulbricht. FBI agents arrested Ulbricht on Tuesday in San Francisco, said Julie Bolcer, a spokeswoman for the US attorney's office for the Southern District of New York, which is handling the case.

In an affidavit filed in court, an FBI agent said Ulbricht had operated the Silk Road website since January 2011, using it to sell cocaine, heroin, LSD and other controlled substances to customers in the United States.

FBI special agent Christopher Tarbell also said Ulbricht had attempted to orchestrate the murder of an unidentified Silk Road user who had threatened to expose the identities of thousands of the website's customers. The affidavit did not say whether the murder-for-hire plot was carried out.

Bitcoin is a virtual currency that can be obtained through online exchanges and is used to buy games and virtual products from internet merchants, and in some instances, reportedly, to move money for illicit purposes.